Research Reports

Finadium May 2018 Large technology firms have started to launch retail financial services offerings, from payments to asset management to edging towards banking licenses. These moves suggest a new wave of well-financed and well-connected firms in direct competition with the established financial services industry, who are at the same time clients of these same technology…

Finadium May 2018 This research report looks at Frankfurt as a financial center and some key aspects that may determine its competitiveness and future relevance post-Brexit and beyond. Does it have what it takes to become a new collateral and liquidity hub for both Europe and the world? This is no idle chatter: banks in…

Finadium April 2018 Central banks face new competition in their issuance of currency: cryptocurrencies have captured the popular imagination, if not yet the actual spending behavior of most consumers. Even so, central banks and regulators are developing strategies for how to respond to cryptocurrencies including potential bans, treating them as commodities or requiring government supervision….

Finadium March 2018 Cloud computing is an attractive opportunity in capital markets in terms of cost management and effective service delivery. With 29 out of 30 Global Systemically Important Banks (G-SIBs) reporting a cloud partnership, the rest of the industry without a cloud solution will soon follow. While cloud services offer advantages, there are open…

Finadium March 2018 Asset holders as securities lenders have a problem: the traditional borrowers of their securities don’t need them as much as they used to. This is the result of internalization efficiencies plus balance sheet regulations that have encouraged big banks to lend more inventory between clients or trade the same exposures as Total…

Finadium February 2018 This report is part of Finadium’s Fintech Capital Markets series. A new type of capital raising has captured the imagination of global markets: the Internet Coin Offering (ICO), or Token Generation Event. The digital tokens being created and promoted by these activities have attributes similar to equities and bonds, and major differences…

Finadium February 2018 European regulation of Securities Financing Transactions (SFTs) is having its desired effect, which is a near gold standard of risk management. Unfortunately, it’s at the cost of market vibrancy. The inclination of regulators to propose restrictive conditions then fix them later (“Regulate First, Refine Later”), plus the myriad of regulations both proposed…

Finadium February 2018 Interest in blockchain and Internet Coin Offerings (ICOs) is in the air, and market disruption is encouraging the idea that securities lending on the blockchain is a potential game changer. The securities lending market isn’t like other markets however, and there are structural and cultural obstacles that blockchain proponents must consider before…

Finadium February 2018 The Big Ideas Quarterly contains a summary of recent Finadium research for our Securities Finance, Collateral and Derivatives clients. Reports: Evolution of the Total Return Swaps Market Collateral Management Technology Vendors in 2017: A Finadium Survey Questions on the US Repo Market:Analysis from the Rates & Repo 2017 Conference European Prime Brokerage…

Finadium January 2018 The Total Return Swaps (TRS) business has enjoyed substantial growth in the last three years, with infrastructure, operations, and technology providers adapting to meet new bank and client demand for trading and post-trade services. The ecosystem is not only growing for traditional use of TRS in synthetic financing; users are also emerging…

Finadium January 2018 This report is part of Finadium’s Fintech Capital Markets series. Smart contracts are a next phase of development in Distributed Ledger and blockchain technologies. They present an opportunity to automate currently manual processes and move algorithms that run on legacy technology to a more efficient platform. In this report, we surveyed 11…

Finadium December 2017 Finadium has conducted its fifth industry-wide survey of collateral management technology vendors, providing a comparative look at the development of this sector. The survey provides readers with a product summary and coverage, market differentiators, new functionalities added in the last year, and technology and implementation considerations. On an industry-wide basis, we analyze…

Finadium December 2017 In November 2017, Finadium held its first Rates & Repo Conference in New York. This event drew 145 attendees across the buy-side, sell- side, vendors and regulators to discuss current market dynamics, technology and future trends in the US short-term investment market with a focus on repo. We collected 57 questions from…

Finadium November 2017 With European hedge funds holding over US$543 billion in assets, European prime brokers continue to run vital and productive businesses. This is especially true as, following reorganization of their balance sheets, these business divisions have growth opportunities that warrant capital allocations if senior management is receptive. This Finadium research report is a…

Finadium October 2017 The global tri-party market size is US$4.65 trillion, up from US$4.3 trillion in 2014, according to a new survey from Finadium. Tri-party services continue to evolve by product and region, and while one wave of regulatory scrutiny has subsided, another from the market itself is now heating up as competition, cybersecurity and regional…

Finadium October 2017 Capital markets are powered by the systems and technologies that support the business. These include not only some of the most advanced and cutting edge systems in the marketplace today but also some of the oldest and most established. Important elements of capital markets are based on technical infrastructure that has…

Finadium October 2017 On June 22, 2017, the Federal Reserve’s Alternative Reference Rates Committee made its long-awaited announcement: a US Treasury repo rate is the preferred replacement for LIBOR. This decision has now had ripple effects around the world, with dealers and investors beginning to prepare for a new era in financial markets. The move…

Finadium September 2017 In capital markets, post-trade processes that are manual or semi-manual are an ongoing source of costs and operational risk. Regulators are focused on workflows and processes that involve high degrees of human intervention with the corresponding possibilities of error; operational managers are under pressure to reduce resource costs arising from manual…

Finadium September 2017 Although ETFs with ultra short and US Treasury investments have been in existence since 2009, more recent funds that offer same day liquidity and the possibility of collateral access for OTC derivatives may generate new interest from investors over the next year or two. There may also be opportunities for some ETFs…

Finadium September 2017 Central bank tapering season is on the horizon: this means opportunities for price volatility, spread movements between products, and exchange rate fluctuations. It also means a potentially new set of market dynamics for liquidity and collateral supply across government bonds and other fixed income products. Four major central banks have built up…

Finadium August 2017 The technology buyer in capital markets is getting inundated with marketing about the latest hot trend in fintech: Artificial Intelligence (AI). Still reeling from the blockchain onslaught of the last few years, product managers, strategists and others responsible for evaluating and implementing technology are understandably wondering how much of the AI…

Finadium August 2017 Use the Current Exposure Method, SA-CCR, or just cut out margin from the Leverage Ratio altogether? Answering this question, and soon, is a core challenge and opportunity for global equity derivatives liquidity today. But regulation is not the only factor changing market structure: technology is also playing a major role. The adoption of…

Finadium July 2017 The demand for OTC derivatives collateral is ramping up worldwide. In Asia, like everywhere, there are outstanding questions about how much collateral will be needed and where will it come from. Some of this will be determined by Credit Support Annexes (CSAs) between end-users and dealers: the more conservative the CSA, the more…

Finadium July 2017 This report presents the results of Finadium’s tenth annual survey of asset managers in securities lending. The report is a guide to best practices, a peer review and a forward-looking analysis of the attitudes and decisions of asset managers in the securities lending space. This year’s report covers 31 large institutional asset…

Finadium June 2017 It’s not the Wild West anymore; US prime brokerage has matured. Prime brokers still provide core critical services to the professional and institutional investment community that include market access, execution, complex portfolio financing, liquidity and of course, leverage. But the provision of these services has changed since the peak years of 2006…

Finadium June 2017 Everything is going to be better when it is digitalized! Costs and risks will both be lower and easier to manage! This is the promise of “digital” but what does digital really mean? Aren’t banks and large asset managers largely digital already, and if so, what does more digital going to…

Finadium June 2017 In April 2017, Finadium held its first Investors in Securities Lending (FISL) Conferences in New York and London. These events drew over 400 market participants to discuss important trends and business opportunities in securities lending and repo. While specifics differed between New York and London, a common theme was the desire of investors…

Finadium May 2017 A push/pull situation between dealers, ISDA and the buy-side has reached a new crescendo in recent months as Basel Committee/IOSCO rules have forced a large-scale repapering of bilateral Credit Support Annexes. This repapering has been accompanied by a renewed effort by dealers to standardize collateral schedules, a move that has taken up…

Finadium May 2017 Banks, utilities and vendors have heard the warnings loud and clear: change is coming. After spending almost a decade trying to stay ahead of an unprecedented wave of regulatory requirements, the industry is now aware of a potentially more significant business threat in the form of a new class of market…

Finadium May 2017 Changes to financial rules have been fast and furious including recent modifications to Initial and Variation Margin requirements in OTC derivatives. At the same time, advances in high frequency trading, robo-advisors and passive investing have boosted the growth of new actors with their own directives and rationales. One consequence seems to be…

Finadium April 2017 This report details quantitative and qualitative metrics that investors may want to consider in measuring the performance of their securities lending programs. The report is written for program managers to evaluate their options as securities lending receives more regulatory attention, and changes to business and reporting frameworks mean that investors need to pay…

Finadium April 2017 The provision of counterparty default indemnification in securities lending remains one of the limiting factors to market expansion, impacting both agent lender capacity and investor participation. Indemnification costs are now expensive liabilities on bank balance sheets. Meanwhile, indemnification remains crucial for investors to comfortably engage in the market. It becomes only…

Finadium March 2017 Innovation is the new catchphrase in bank capital markets activities. No longer able to sit on the sidelines while fintech firms outrace them to new business models, banks are taking a proactive role in creating new business opportunities built on technology. This leads to challenges and new thinking around how to operationalize…

Finadium March 2017 From mergers and acquisitions to share buybacks, corporate actions in equities have a direct impact on the securities lending market as arbitrageurs may take advantage of embedded options to capture a spread. In some corporate actions like scrip dividends and rights issues, this return can sometimes be projected beforehand with benefits for existing…

Finadium February 2017 Capital markets architecture was once a key enabler of business growth but is now more often a source of high costs and organizational inertia. In this Finadium Technology Focus we evaluate the known strategies for improving infrastructure and what the adoption of each approach means to internal bank IT staff, systems vendors,…

Finadium February 2017 This research report evaluates banking profitability from the fundamentals of measurement to 10 levers for improvement, with an emphasis on financing and derivatives activities in capital markets. We also consider how regulatory changes make it harder than ever to understand which transactions or overall businesses are genuinely profitable, and what can be…

Finadium February 2017 The US repo market is central to the provision of liquidity across multiple asset classes. As a result, disruption in this market fans out in ways that impact a wide number of financial investors. Recent quarter ends have shown rate spikes as dealers work to ensure enough cash and High Quality Liquid Assets…

Finadium January 2017 This Finadium Fintech Focus report provides a summary of business process and technology considerations related to compliance with new Best Execution requirements for Securities Finance Transactions (SFTs) under the Markets in Financial Instruments Directive (MiFID II). This report should be read by product and technology development managers responsible for securities finance technology…

Finadium January 2017 Although hurdles remain, collateral management remains a central part of financial markets in Asia. While expected increases for collateral requirements of US$10 trillion may never fully emerge, each new day brings reasons why investors and banks must pay close attention to their collateral mobilization strategies. This is a business that impacts every…

Finadium January 2017 The November 2016 US election has brought uncertainty to a wide range of economic and financial activity, not least of which is the future of Dodd-Frank. US banks have had six years to adjust to Dodd-Frank’s sweeping new rules on the banking industry, from OTC derivatives to retail banking to credit cards….

Finadium December 2016 Blockchain, also called Distributed Ledger Technology (DLT), remains a compelling technology in settlements and securities finance. Since our first report on blockchain in 2015, the focus has shifted from what is it, how does it work and why does it matter, to sharply directed questions on execution. Users are asking: when and…

Finadium December 2016 As prime brokerage balance sheets continue to respond to global and domestic regulation, custodian banks have captured financing-related business with alternative asset managers. While prime custody has been a fixture of custodian services for the last seven years, the new wave of service provision includes access to securities loans for short selling and…

Finadium November 2016 Finadium has conducted its fourth industry-wide survey of collateral management technology vendors, providing a comparative look at the development of this sector. The survey provides readers with a product summary, product coverage, market differentiators, new functionalities added in the last year and technology and implementation considerations. On an industry-wide basis, we analyze the…

Finadium November 2016 The Net Stable Funding Ratio (NSFR) is a flawed metric; we are not the first to say this and we will not be the last. Since its introduction by the Basel Committee on Banking Supervision in October 2014, and in the US version of the rules, inconsistencies and potentially very negative consequences have…

Finadium October 2016 Finadium’s inaugural survey of Asian bank managers shines a light on current and future OTC derivatives market conditions from the point of view of managers at 13 of the largest Asian banks. These firms include regional players as well as important branches of North American and European firms. This report, produced by…

Finadium October 2016 As banks grapple with managing regulatory costs, and buy-side firms express concern about counterparties, both Eurex and CME have rolled out models for buy-side firms to have direct credit exposure to central counterparties (CCPs) without a clearing firm. This move is exceptional because it breaks down traditional barriers in the value chain between…

Finadium September 2016 The Direct and Peer to Peer marketplaces are opportunities for lenders of cash and securities to meet borrowers without bank intermediation. While the nature of the transaction has existed for decades, the business is seeing a new evolution as major service providers enter the space with organized, structured product lines. Direct and Peer…

Finadium August 2016 In the modern bank enterprise, operations and technology are deeply interconnected. The specific functions of operational staff vary from organization to organization but the infrastructure is always the vital link between trading intent and trading success. As bank profitability is increasingly challenged by capital regulations and low interest rates, the drive for efficiency…

Finadium July 2016 This report presents the findings of Finadium’s ninth annual asset manager survey on collateral management in securities finance. The report is based on interviews with 30 asset management firms in North America and Europe investing a combined US$19.9 trillion in assets. Managers discussed their thinking on cash collateral management policies, separately managed…